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Spillover effects in local public spending

Author

Listed:
  • Massimiliano Ferraresi
  • Giuseppe Migali
  • Leonzio Rizzo

Abstract

This paper investigated the fiscal interactions between Italian municipalities over the period 2001–11 and found a positive horizontal interdependence in spending decisions. The results are robust to different specifications of the spatial neighbours and are confirmed by a natural experiment (an earthquake in the Abruzzo region of Italy in 2009) that creates an exogenous variation in the neighbours’ spending. Furthermore, there is no evidence of yardstick competition when one considers political effects, while a negative relationship is found between spatial interaction and the size of the municipality. Thus, it can be concluded that spillover effects drive the strategic interactions in spending decisions.

Suggested Citation

  • Massimiliano Ferraresi & Giuseppe Migali & Leonzio Rizzo, 2018. "Spillover effects in local public spending," Regional Studies, Taylor & Francis Journals, vol. 52(11), pages 1570-1584, November.
    • Handle: RePEc:taf:regstd:v:52:y:2018:i:11:p:1570-1584
    DOI: 10.1080/00343404.2017.1415429
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    Cited by:

    1. Massimiliano Ferraresi & Massimiliano Mazzanti & Matteo Mazzarano & Leonzio Rizzo & Riccardo Secomandi, 2020. "Political cycles and yardstick competition in the recycling of waste. Evidence from Italian provinces," Working papers 93, Società Italiana di Economia Pubblica.
    2. Xing Li & Xiangyu Ge & Wei Fan & Hao Zheng, 2021. "Research on Spatial Correlation Characteristics and Their Spatial Spillover Effect of Local Government Debt Risks in China," Sustainability, MDPI, vol. 13(5), pages 1-32, March.
    3. Banaszewska Monika, 2023. "Spatial interactions in local public debt. Evidence from Poland," Economics and Business Review, Sciendo, vol. 9(3), pages 206-223, October.
    4. Pan, Xiongfeng & Xu, Haitao & Li, Mengna & Zong, Tianjiao & Lee, Chew Tin & Lu, Yuduo, 2020. "Environmental expenditure spillovers: Evidence from an estimated multi-area DSGE model," Energy Economics, Elsevier, vol. 86(C).
    5. Kalinca Léia Becker, 2023. "An analysis of Fundeb's contribution to the quality of public education in Brazilian municipalities," Review of Development Economics, Wiley Blackwell, vol. 27(2), pages 879-896, May.
    6. Kevin Willardsen, 2021. "Measuring fiscal interactions in local federalism: Evidence from Florida," Papers in Regional Science, Wiley Blackwell, vol. 100(4), pages 891-923, August.
    7. Dũng Tuấn Nguyễn & Takeshi Miyazaki, 2023. "Strategic interaction among Japanese municipalities regarding public servant salary levels," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 71(2), pages 463-485, October.
    8. Zefeng Tang, 2022. "Local Government Debt, Financial Circle, and Sustainable Economic Development," Sustainability, MDPI, vol. 14(19), pages 1-29, September.
    9. Massimiliano Ferraresi, 2018. "Revisiting yardstick competition and spillover effects in in the new era of spatial econometrics: evidence from Italian cities," Working papers 69, Società Italiana di Economia Pubblica.

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